JW Surety Bonds

Tag Archives: freight brokers

$75K Property Broker Bond Filings Begin, Unaffected By Government Shutdown

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As of this morning (10/1/13), the FMCSA is accepting electronic filings on the new $75,000 freight broker bond requirement. The FMCSA previously stated that electronic filings could be processed by 10/1 and they did not let the Federal shutdown get in their way. Thousands of freight brokers throughout the country are currently being filed by various bond providers.

Do Brokers Need A Bond 10/1 or 12/1?

The FMCSA has been consistent in stating that “Beginning October 1, 2013, a broker will need to obtain and file with FMCSA a surety bond or trust fund agreement in the amount of $75,000”.

What About the 60 Day Compliance Window?

Many have been confused, as the FMCSA also created a 60 day compliance window. However, it’s not quite that simple. Many bonding companies sent out cancellation notices on the old $10,000 bonds months ago to ensure the $10K bonds are not active as of 10/1. This means that depending on the bonding company that issued the bond, brokers that previously had a $10K bond may no longer have anything in place as of today if they did not find a $75K bond solution.

What If You Have Not Purchased A $75K Bond Yet?

1. Stop brokering loads until you are compliant

Brokers need to be sure not to broker a single load until they confirm they are compliant. The 60 day window allows brokers to continue to do business, even with a $10K bond in place, but as stated above many no longer have anything in place as of today. We strongly advise brokers to be certain they have at least $10K in security in place before brokering any more loads.

2. Get the best quote possible on a $75K bond

The bond market softened in the past 2 months. Nearly everyone qualifies for this bond without collateral and low premiums. However, not all bond programs are equally competitive and you can only access the best program in the market through our agency.

3. Don’t Wait Until The Last Minute

Even if you are compliant with a $10K bond in place, you need to plan what solution is best for you. Many find the shopping process complex due to hidden costs and how trusts can affect your ability to obtain a loan. Waiting too long can close doors on options and result in paying substantially more and negatively affect your credit capacity.

Get A Bond Quote In Minutes

JW Surety Bonds has an exclusive bond program for the $75,000 freight broker bond available now:

• A rated, Treasury-listed surety
• No collateral
• Lowest rates in the country
• Approvals regardless of credit strength
• 99.9% approval rate

 

 

Be prepared for the October 1 deadline. Apply directly on our website to get an instant approval.

AIPBA Asserts $75K Property Broker Bond Program Too Good To Be True

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James Lamb, President of the Association of Independent Property Brokers & Agents (AIPBA) recently expressed his belief that the JW Surety Bonds $75K freight broker bond offer is simply too good to be true.

While we agree that our offer is the most competitive in the marketplace, it is not “too good to be true”.

Update: Mr. Lamb contacted us with concerns that this post would be interpreted as an endorsement from the AIPBA. We believe it is clearly not an endorsement. He also has stated that his words were taken out of context. Here is the full context with Mr. Lamb’s assessment highlighted.

What Makes Our Program So Controversial?

No business financial statements – Most bond markets require freight brokers to provide business financial statements for underwriting purposes.  We do not need them.

No collateral, ever – Many bond markets are requiring freight brokers to post large amounts of collateral in order to secure their bond.  We never require collateral on our $75K broker bonds.

Lowest pricing – Prior to the introduction of our program, the most competitively priced product in the market was the “group bond” (aka surety trust pool) at $3,500 per year.  On average, our program is 47% less expensive than that.  The group bond has since been declared unacceptable by the FMCSA.  However, we did not raise our pricing.

99.9% approval rate – Many bond markets decline nearly as many applicants as they approve.  One might think that our program is limited to mega brokers.  However, our program is for brokers big or small.  We have quoted thousands of freight brokers in the past month and have declined only a small handful.  Whether you have bad credit or are new in business, we can help!

Strongest Backing – With an offer this attractive, one might presume the bonding company backing it would have a very weak financial backing.  The reality is that the carrier backing the program is the strongest in the market with an ‘A’ rating from A.M. Best and a “Positive” outlook going forward.

Will The Rates Go Up Next Year?

While Mr. Lamb appears to be certain that rates will go up next year, the fact is that no one knows for sure.  The surety bond industry is still operating in a capitalist marketplace.  There is no monopoly and surety markets behave similar to other markets in that when one company lowers their pricing, others may be encouraged to do likewise.  The difference when it comes to surety is that the bonding companies are essentially making “bets” on risk.  If the payout on claims makes a segment unprofitable for a bonding company, it is no secret that they will either increase premiums or get out of the market.

If we were interested in price gouging, we would have increased our pricing when the FMCSA declared the “group bond” unacceptable.  We did not.

Will The Rates Go Down Next Year?

Our philosophy has been to reduce the rates on renewals whenever possible.  This helps to increase our retention of clients (keep in mind, no monopoly here and we want your business) and can actually help make our program more profitable.  This all may sound backwards, but keep in mind, our goal is to retain clients that are “good bets”, meaning no claims.  Each year a client is with us we see a lower chance of claim activity.   Think of it as weeding out the bad apples.  It’s difficult to underwrite character, but a broker with a proven record of no claims always speaks for itself.

What You Can Be Certain Of

If you have a quote from us that is thousands less than the competition, we can guarantee we will save you thousands.  Sounds like a ridiculous redundant statement right?  Unfortunately, that’s what we’re trying to help brokers throughout the country realize.  No one can say with 100% certainty what next year’s rates will be for any product and surety is no different.

Get A Bond Quote In Minutes

JW Surety Bonds has an exclusive bond program for the $75,000 freight broker bond available now:

• A rated, Treasury-listed surety
• No collateral
• Lowest rates in the country
• Approvals regardless of credit strength
• 99.9% approval rate

 

 

Be prepared for the October 1 deadline. Apply directly on our website to get an instant approval.

Beware of MAP-21 “Patch” Products

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The freight broker bond increase to $75,000 is upon us. The FMCSA stated they are allowing for a 60 day compliance window due to the near certain log jam of filings that will be occurring.

Some are encouraging brokers to use this 60 day window to hold off on getting their bond. In lieu of a $75K bond, some bond markets are offering a “patch” product to allow brokers to wait until the last possible day to obtain a bond.

How Do These “Patches” Work?

These “patches” are simply short term bond policies of $10K that coincide with the FMCSA extended compliance window. Bonding companies throughout the country have sent out cancellation notices on the old $10K bonds, making them inactive by 10/1. These “patch” products put a $10K instrument in place from 10/1 to 12/1.

Could “Patch” Products Cost You More?

Some brokers may be intrigued by these “patches”, especially those that are still hopeful that the $75K bond requirement will be repealed. However, the markets we’ve seen offering these patches have high pricing, starting at $3,000 per year. This is 312% higher than the lowest price we offer and 61% higher than what the majority of brokers are being quoted through our program.

Have Your Cake & Eat It Too

Due to the high volume we’re experiencing, we have decided not to offer a “patch” product, as we feel it will do more harm than good for our clients.

We understand that one size does not fit all and some might feel a “patch” offering is a good fit for them. Here are some questions that you need to ask on “patch” offers to ensure you don’t needlessly spend more.

Can I increase the $10K “patch” policy to $75K at the same rate?

If they are unwilling to increase the policy it will be wasted money should the $75K requirement stand, as the FMCSA does not allow partial or combined securities at this time. In other words, you would have to purchase an additional $75K bond that covers the same 60 day term.

If I purchase a “patch”, am I required to obtain my $75K bond from you?

No one can force you to purchase the $75K bond from them, but what they can do is refuse to increase your “patch” policy to $75K or only do so if you purchase a $75K bond from them as well. Unfortunately, this would limit the brokers choices: 1) Pay thousands more and make use of the “patch” term. 2) Purchase a $75K bond effective 10/1 overlapping the $10K “patch” term.

If I purchase a $75K bond elsewhere, will you still increase my $10K “patch” policy to $75K?

If the answer to this one is yes, then the “patch” product will serve it’s purpose and not be horribly costly to you, as you can purchase a $75K bond with an effective date of 12/1 without restrictions. This allows you to make use of the “patch” without limiting your options.

Will A “Patch” Policy Make You Compliant?

Some are interpreting that “patch” products will keep brokers in compliance due to the 60 day window. However, we interpret the window as a 60 day period to prove compliance with a $75K bond, effective 10/1; not an extra 60 days to only have $10K in place. Equally as important, many carriers of the industry are requiring a $75K bond as of 10/1, which we believe makes the window a moot point.

Who Do These “Patches” Really Benefit?

It is our belief that “patch” products are more beneficial to agents sales numbers than the brokers purchasing them. The proof is in the numbers. If you are entertaining the idea of a “patch”, be sure to get all of the details as to what happens after the 60 day period and compare it to our program. We’re certain, it will be clear as day.

Get A Bond Quote In Minutes

JW Surety Bonds has an exclusive bond program for the $75,000 freight broker bond available now:

• A+ rated, Treasury-listed surety
• No collateral
• Lowest rates in the country
• Approvals regardless of credit strength
• 99.9% approval rate

 

 

Be prepared for the October 1 deadline. Apply directly on our website to get an instant approval.

A Closer Look At MAP-21’s Effect On Freight Brokers

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Earlier this week, we reported on the increase seen in freight brokers listed in the FMCSA database.  As many within the freight industry know, this is a mixed bag, as some of the increase can be attributed to carriers registering as freight brokers.

A big thanks to Michael Curry of My Carrier Resources, LLC.   He provided the data we’ve been working with as well as expert guidance on how to interpret it.

Growth Is Led By New Brokers Not Carriers

From the first week of 2013 to the second week in September, the total number of brokers listed within the FMCSA database grew by 2,746.  In that same time period there were 2,098 new brokerages created and 696 carriers registering as brokers.  In other words, carriers now being listed as brokers only make up 25.3% of the increase seen.  The majority of the growth is from new broker registrations.



What Will Happen After October 1st?

What happens after the $75,000 bond goes into effect is anyone’s guess.  However, the bond market softened in the past 30 days and the hurdles of obtaining a bond no longer being an issue.  Any broker in the country can obtain a $75K bond with lower rates than the $10K bond and without posting collateral.  Brokers that wanted to start their own business, but couldn’t, may begin to do so in the months to come.  We will be sure to post follow-ups on Michael Curry’s data throughout the year.

Get A Bond Quote In Minutes

JW Surety Bonds has an exclusive bond program for the $75,000 freight broker bond available now:

• A+ rated, Treasury-listed surety
• No collateral
• Lowest rates in the country
• Approvals regardless of credit strength
• 99.9% approval rate

 

 

Be prepared for the October 1 deadline. Apply directly on our website to get an instant approval.

Active Freight Brokers Increase Despite Pending Map-21 $75,000 Bond Requirement

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Many within the transportation industry have argued that MAP-21’s bond increase to $75,000 would put many brokers out of business due to an unobtainable bond requirement.

According to statistics provided by My Carrier Resources, LLC, the number of active brokers listed in the FMCSA database has steadily increased throughout 2013.  In fact, the biggest spike of the year occurred at the start of September. Is this the result of carriers registering as brokers prior to October 1st or are brokers actually increasing? In this article, we’ll examine where we’ve been over the past 12 months and where the freight broker industry may be heading.

Update: Since this initial post, many have questioned how many of the new brokers are carriers vs. new broker registrations. You can find further details on the breakout here



What’s All The Fuss About?

Until recently, the surety bond market for the October 1st requirement was extremely difficult to qualify for without collateral and high annual costs.  It was common to see collateral requirements in the tens of thousands of dollars along with premiums 200-300% higher seen in the current bond market.  And that was for freight brokers that actually qualified for approval.  Scores of freight brokers were flat out declined, leaving them the option of posting $75,000 to a trust, partnering with a larger company, or closing their doors.  With trusts having several downsides outside of the large financial commitment, the opponents of MAP-21 had a strong case that the bond was unobtainable for many.

What Changed?

In August, JW Surety Bonds introduced a $75K bond program that allows any broker in the country to qualify for the bond without having to post any collateral.  Premiums were also slashed by thousands comparative to the other market participants.

The introduction of the program not only offered a real solution to brokers that couldn’t previously qualify, but it also loosened the overall bond market.  Since the program’s inception in August, some other bond providers have loosened underwriting guidelines as well.  However, as of now, the only program in the country that can approve 99% of applicants, never requiring collateral is the JW Surety Bonds $75K bond program.

Will Active Brokers Continue To Rise Through Oct. 1st?

It is possible we may see more active brokers in the FMCSA database than ever after the $75,000 bond increase.  How can this be?

  • Many brokers are changing their plans.  Those who were once planning on closing their doors or partnering with a larger company no longer have to.
  • Brokerage start-ups that were sitting on the sidelines, thinking about opening their business may now begin to do so in droves.
  • The overall health of the economy is slowly, but steadily improving, which will equate to more loads shipped.
  • With MAP-21, freight forwarders are required to register as a broker, even if they broker business only occasionally.

Certainly, the last item skews the numbers a bit.  However, despite many doomsday predictions, we may actually see an increase in active freight brokers even when you don’t include the freight forwarders not currently listed.

What To Expect In 2014?

No one can say with certainty whether the amount of freight brokers will increase or decrease post MAP-21.  The key time period to keep an eye on will be October 1st and the 60 days following.  The FMCSA has held firm to the 10/1 enforcement date, but is allowing for a 60 day compliance window.   This means that brokers obtaining a bond after October 1st will need their bond backdated; something that is only typically done for a max of 30 days within the surety industry.  Bonding companies can choose to make exceptions if they believe the FMCSA will not go after freight brokers with a $10,000 fine per incompliant load.  We’re advising to all freight brokers to err on the side of caution and be compliant for 10/1.  You do not want to put the fate of your business in someone else’s hands.

Get A Bond Quote In Minutes

JW Surety Bonds has an exclusive bond program for the $75,000 freight broker bond available now:

• A+ rated, Treasury-listed surety
• No collateral
• Lowest rates in the country
• Approvals regardless of credit strength
• 99.9% approval rate

 

 

Be prepared for the October 1 deadline. Apply directly on our website to get an instant approval.

Carriers Requiring $75K Bond Of Brokers By Oct. 1st To Do Business

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There has been confusion as to whether freight brokers need their bond by 10/1 or 12/1.  What is clear is that many carriers working with brokers are requiring them to have their $75,000 bond to be in place by October 1st if they wish to do business.

JW Surety Bonds Keeping Brokers Compliant

JW Surety Bonds has been keeping its clients compliant for October 1st.  Unfortunately, there are still a large amount of freight brokers and forwarders that are waiting until the 11th hour on the requirement that may be shut down by carriers before the FMCSA compliance team gets to them.

Avoid Filing Delays

We are the largest provider of the $75K bond in the country and are anticipating massive volume in the coming weeks.  Most agencies that offer this bond are writing it through our exclusive program. We are still keeping to a 24 hour turnaround time, but that may change as we get closer to October 1st. We recommend everyone get their bonds now to avoid possible filing delays. We will be providing full refunds if the bond is repealed and never issued.

Get A Bond Quote In Minutes

JW Surety Bonds has an exclusive bond program for the $75,000 freight broker bond available now:

• A+ rated, Treasury-listed surety
• No collateral
• Lowest rates in the country
• Approvals regardless of credit strength
• 99.9% approval rate

 

 

Be prepared for the October 1 deadline. Apply directly on our website to get an instant approval.